Essential Health Benefits Guidance Issued

The Center for Consumer Insurance and Oversight (CCIIO) has released 22 frequently-asked-questions about the essential health benefits packages required by the Patient Protection and Affordable Care Act (ACA). On Dec. 16, 2011, the Department of Health and Human Services (HHS) released a bulletin describing the approach it plans to take in future rulemaking about essential health benefits and this FAQ addresses questions that arose from the bulletin.

To provide all Americans access to quality, affordable health insurance, the ACA ensures that health insurance plans offered in the individual and small group markets, both inside and outside of the Health Insurance Exchanges, offer a comprehensive package of items and services, known as “essential health benefits. The ACA requires states to establish state-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges by 2014. These Exchanges will be administered by a governmental agency or nonprofit organization, through which individuals and small businesses with 100 or fewer employees can purchase qualified coverage.

According to the HHS’ bulletin, states would have the flexibility to select an existing health plan against which to set the “benchmark” for the items and services included in the essential health benefits package. This benchmark plan can be either: one of the three largest small group plans in the state; one of the three largest state employee health plans; one of the three largest federal employee health plan options; or the largest HMO plan offered in the state’s commercial market. The FAQ confirms that states are allowed to select only one plan as its “benchmark” option.

In addition, the CCIIO will propose a process for revising the benchmark plan in future rulemaking, giving states the flexibility to update the benchmark plan as the plan makes benefits changes each year. Under the intended approach, the specific set of benchmark benefits selected in 2012 would apply for plan years 2014 and 2015. For 2014 and 2015, the benchmark plan selection would take place in the third quarter of 2012. A consistent set of benefits across these two years would limit market disruption during this transition period. As indicated in the Bulletin, HHS intends to revisit this approach for plan years starting in 2016, the FAQ noted.

If the benchmark plan is missing coverage in one or more of the ten categories required as essential health benefits, the FAQ notes that the state is required to supplement the benchmark plan. For example, if a benchmark plan covers newborn care but not maternity services, the state must supplement the benchmark to ensure coverage for maternity services. The default benchmark plan would be supplemented by looking first to the second largest small group market benchmark plan, then to the third, and then, if neither of those alternative small group market benchmark plans offers benefits in a missing category, to the FEHBP benchmark plan with the highest enrollment.

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